2011 State Legislative Session: Just What Happened in Olympia This Year?

The grueling 2011 state legislative session finally came to a close in late May. By now you’ve heard a lot in the news about how the state budget cuts will hurt our K-12 schools, make college more expensive and reduce health care benefits for the poor. You may be concerned about how all of this will impact your kids, your grandkids and you – especially if you or someone you care for relies on long term care or health care services funded by the state.

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Just what happened in Olympia this year?

The worst recession in 75 years resulted in a $5 billion gap over the course of the next two years between the revenue the state is likely to take in through tax collections and the spending the state is obligated to pay out, based on existing spending patterns and increased demand for state services.

If this sounds familiar it’s because it happened last year as well. But last year the federal government kicked in stimulus funds to help bridge the gap and lawmakers raised revenue to avoid some of the worst of the cuts. Remember the 2 cents on a can of soda? (The soda tax that was later repealed by voters with Initiative 1107)

This year the same ugly problem was harder to solve. The federal tap ran dry. And lawmakers had a new big hurdle to raising new revenue thanks to Initiative 1053, the Tim Eyman supported initiative that requires a two-thirds supermajority vote to make changes to the tax code.

Given this challenge, how did lawmakers respond? Did they give up on closing tax loopholes? Did they make deep cuts to senior services? Were there any bright spots in all of this? In short the answer is yes, yes and yes. Here’s more detail.

Lawmakers gave up on closing tax loopholes

Most voters probably didn’t realize that Initiative 1053 applied a supermajority vote threshold not only to any tax increase but also to closing tax loopholes. That includes tax exemptions and preferences that no longer make sense or do not meet their stated purpose. As a result, other than user fees, from the beginning lawmakers across the board dismissed the idea of raising new revenue. Even those who would have preferred to close unwarranted tax preferences rather than cut services for vulnerable citizens resigned themselves to an all cuts budget.

Late in the game, once the writing was on the wall as to how deep the cuts would really be, a group of Senators introduced a package of bills to restore services by closing tax preferences for elective cosmetic surgery, chicken bedding and the like. But the effort was too little too late. To call the question, a group of freshman members in the House put forward legislation to close a tax preference for out of state banks. The measure garnered a majority vote but not the supermajority needed for passage and set the state for a potential court challenge to Initiative 1053.

Lawmakers slashed senior services

With no new revenue to narrow the gap, lawmakers solved the budget problem through more than $4 billion in cuts, primarily to education and health care, and made up the rest with fund transfers and limited revenue from user fees.

Funding for salaries for state workers and pension benefits were also reduced. The third biggest reduction in the budget was a $344 million reduction resulting from changes to how certain future benefits are calculated for Plan 1 retirees. This cut will mean a significant loss in income for retired teachers across our state.

Low-income seniors who need long term care will also be hard hit by a number of cuts, the biggest of which is a 10 percent reduction in Medicaid funded home care hours. Many of the same seniors who feel this hit will also be impacted by the elimination of the Medicare Part D Co-Pay assistance program, elimination of coverage for hearing aids and eyeglasses for seniors on Medicaid plus potentially fewer Meals on Wheels and other services funded through the Senior Citizens Service Act. All of this together means it will harder for people to remain in their own home as they age and many will be forced to turn to nursing home care – which ironically is far more expensive for the state.

The bright spots – lawmakers improve the quality of long term care

Even in a tough budget year, lawmakers passed several important pieces of legislation that will improve the lives of older Washingtonians. AARP worked closely this year with the State Long Term Care Ombudsman and other aging organizations to support passage of HB 1494 and HB 1277. These bills will improve the quality of long term care in community based settings by protecting consumers who use Elder Care Referral Agencies and strengthening oversight of Adult Family Homes.

On the health care front, lawmakers passed legislation calling for the development by 2014 of a state based health insurance exchange where low and moderate income people can more easily shop for insurance plans and qualify for federal subsidies if they need help purchasing them (SB 5545). They also approved a request by Insurance Commissioner Mike Kreidler to require insurance companies to make the justifications for their rate increases public (HB 1220).

These and other bright spots such as passage of the Foreclosure Fairness Act and legislation to expand the definition of financial exploitation were the rays of sunshine in an otherwise dreary winter session in Olympia.